Congress Requires Department of Defense to Perform Cost Benefit Analysis


Many people, including me, have noted that the National Defense Authorization Act (“NDAA”), signed into law by President Obama on December 31, 2011, prohibits the Department of Defense (“DoD”) from using any appropriated funds to achieve the two highest levels of green building certification offered by the U.S. Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) Program – platinum and gold.  The NDAA, however, does provide that the Secretary of Defense can certify a building under LEED gold or platinum standards if certification imposes no additional cost to the DoD, or if the DoD conducts a cost-benefit analysis of the project and there is a demonstrated payback for implementing energy improvements or sustainable design features.

More interesting, upon further reflection, is that the bill requires that by June 30, 2012 the Defense Secretary must provide Congress with a report on the energy efficiency standards the DoD uses for military construction and repair.  The report must include:

  1. A cost-benefit analysis as well an examination of the return on investment and long-term payback of LEED, ASHRAE 189.1 and ASHRAE 90.1-2010; and,
  2.  A new DoD policy on energy efficient construction based on the cost-benefit and ROI analysis.

 The methodology for assessing the "cost-benefit" and return on investment of the standards is not specified.  Given that life-cycle costing makes the ROI of energy efficiency and other green features much more attractive, the standard that is used will be significant.   

The proposed DoD "policy" could also be used by Congress as a model to impose on the other Federal agencies, which mostly use LEED-Silver as their building standard.

Look out for a debate in the middle of the year over whether LEED and ASHRAE 90.1-2010 should be scrapped from DoD (and potentially other agency) requirements because they fail the "cost-benefit" analysis. 

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

1 Comment

  1. This is a step in the right direction. Moreover, Shapiro is right that methodology matters. Simplistic benefit/cost analysis that attempts to crunch metrics of multiple attributes into a single number can be so arbitrary as to be meaningless.

    This seems to be somewhat less of a problem with single-dimension standards such as ASHRAE 90.1-2010 (or Energy Star), which focuses exclusively on energy efficiency. But since buildings (and other infrastructure) generally must serve multiple objectives, such one-dimensional analysis may simply obscure undesirable conflicts and hence trade-offs with other functional requirements.

    More appropriate is a spreadsheet approach that can help illuminate the often difficult conflicts and trade-offs among multiple, competing mandates and objectives. (The head of the Army’s energy office reports over two dozen overlapping mandates.)

    DOD infrastructure includes some 539,000 facilities in over 5000 locations around the world. What is (surprisingly) missing within DOD infrastructure decision-making is a coherent doctrine establishing clear priorities in resolving inevitable conflicts among multiple objectives. The same is commonly true in other government agencies also. In contrast, the State Department’s architecture policy for embassies etc. clearly gives top priority to safety.

    For more detailed discussion of these problems see: